HYDERABAD: Two days ahead of the rollout of Goods and Service Tax (GST), the excise department of Telangana has changed its rules to evade GST. Telangana, had in fact, followed the neighbouring Andhra Pradesh in modifying its rules to evade crores of money paid as GST.
Sounds incredible? The excise departments of both the Telugu states found an alternative route, even before the implementation of the new tax regime, to evade crores of GST annually. The TS government also issued an ordinance to evade the tax.
As per the GST, 18 per cent tax should be paid on bar licence fee. In fact, liquor is not covered under GST. But, the bar licence fee and shop licence fee will be taxable under GST. For example, if the bar licence fee is Rs 1 crore a year, the GST on it will be Rs 18 lakh.
To evade paying the tax, the Telangana government had changed the nomenclature of the bar licence fee as ‘bar excise tax’ and shop licence fee as ‘excise tax’. With the just the names changed, the departments or traders need not pay the GST.
“Once the licence fee is named excise tax, we will continue to get the same amount. But one tax (GST) cannot be imposed on another tax (excise tax),” a top official of the state excise department told Express.
For this, the state government sent a file to Governor ESL Narasimhan on Wednesday and promulgated an ordinance changing the nomenclature of the licence fee as tax. The new excise year will commence in the state from Oct. With the change in rules, the government can save Rs 36 crores GST in July, Aug and Oct. In Oct, the state will issue new rules to continue to evade tax.
Last week, AP announced new rules for new excise year commencing July 1. Its excise department reduced the licence fee by 98 percent. If the bar or shop licence fee is Rs 1 crore, the fee should be 2 per cent i.e., Rs 2 lakh as licence fee. The remaining 98 percent will be collected under excise duty head. Thus, AP will pay 18 percent GST only on Rs 2 lakh fees.
“AP has an advantage to change the rules as its excise year is commencing July 1. It will pay nominal GST by showing only 2 percent of the amount collected from liquor shop/bar owners under licence fee head and remaining under excise duty head. TS excise year will begin in October and we will take a final call then,” TS official sources said.